2019 (7) TMI 1964 - AT - Income Tax

Deduction u/s 80P(2)(i) - AO disallowed deduction as held that (i) the assessee is a Co-operative Bank other than a primary agricultural credit society or a primary cooperative agricultural and rural development bank (ii) the assessee fulfils the condition laid down in section 56(c)(ccv) of Part V of the Banking Regulation Act 1949 for being a Co-operative Bank - HELD THAT - As decided in assessee own case 2014 (10) TMI 1063 - ITAT MUMBAI as held we cannot entertain the Revenue s contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies which are not co-operative banks. In the present case respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P therefore would not apply. In the result Tax Appeals are dismissed. Similar view is taken by the Tribunal s Mumbai Bench in the case of M/s. Mumbai Teleworkers Co-op. Credit Society Ltd. 2014 (7) TMI 1057 - ITAT MUMBAI and in the case of M/s. Kulswami Co-op. Credit Society Ltd. 2014 (4) TMI 355 - ITAT MUMBAI - Decided against revenue.

Summary

Issues involved:
1. Allowance of deduction u/s 80P(2)(i)(ia)
2. Consideration of insertion of section 80P(4) and sub-clause (viia) to section 2(24)
3. Fulfillment of conditions under section 56(c)(ccv) of Part V of the Banking Regulation Act, 1949

Issue 1: Allowance of deduction u/s 80P(2)(i)(ia):
The case involved appeals by the Revenue against the CIT(A)'s order concerning the deduction u/s 80P(2)(i)(ia) of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction claimed by the Co-operative Credit Society under section 80P, stating that the deduction for Co-operative Banks had been withdrawn from AY 2007-08, except for specific categories. The CIT(A) allowed the deduction based on previous ITAT orders. The Revenue argued that the deduction should not have been allowed due to the insertion of section 80P(4) and sub-clause (viia) to section 2(24) post-2007. However, the assessee contended that the issue was resolved in their favor in previous ITAT orders.

Issue 2: Consideration of insertion of section 80P(4) and sub-clause (viia) to section 2(24):
The Revenue contended that the CIT(A) erred in allowing the deduction u/s 80P without considering the post-2007 amendments. They argued that the order should be set aside and the AO's decision restored. Conversely, the assessee relied on previous ITAT decisions in their favor, asserting that the CIT(A)'s order should be upheld. The Tribunal referred to precedents where it was clarified that section 80P(4) does not apply to entities that are not cooperative banks, supporting the assessee's position.

Issue 3: Fulfillment of conditions under section 56(c)(ccv) of Part V of the Banking Regulation Act, 1949:
The AO disallowed the deduction under section 80P, citing that the assessee did not fulfill the conditions under section 56(c)(ccv) of Part V of the Banking Regulation Act, 1949. However, the CIT(A) allowed the deduction based on previous ITAT rulings in the assessee's favor. The Tribunal, following the precedent set by the Coordinate Bench, confirmed the CIT(A)'s order, emphasizing that the facts and issues were identical to previous cases where the deduction was allowed.

In conclusion, the ITAT Mumbai dismissed the Revenue's appeals, upholding the CIT(A)'s decision to allow the deduction u/s 80P for the Co-operative Credit Society based on previous judicial precedents and the specific provisions of the Income Tax Act and Banking Regulation Act.